Ad-hoc-Meldung / Ad hoc Release
nach § 15 WpHG / pursuant to § 15 of the German Securities Trading Act
CONSOLIDATED SECOND QUARTER 2007 RESULTS APPROVED
UNICREDIT'S OPERATING RESULTS FEATURE ROBUST GROWTH (+21.8% YOY) SUSTAINED BY INCREASED REVENUES REPORTED BY ALL DIVISIONS
NET PROFIT OF €1,827 MILLION, TESTIMONY TO THE GROUP'S ABILITY TO CREATE VALUE
- Net profit attributable to the Group: €1,827 million, the best quarter in the history of UniCredit: +6.8% YoY
- Strong growth in revenues (+9.4% YoY) thanks to the buoyant commissions (+10.7% YoY)
- EVA (1) of approximately €2 billion in the first six months of 2007, more than €1 billion generated in the second quarter
- Cost/income ratio down to 49%, -5.2 pp YoY
- Assets under management by the Group reach €256 billion (+9.8% YoY)
- Core Tier 1 at 6.09%, an increase of 27 bp on year-end 2006
- Asset quality and the Group's risk profile improve:
- Significant reduction in total net impaired loans (-€1.9 billion, -13.5% on year-end 2006)
- Incidence of net customer loans down by 51 bp (2.72% at June 2007 versus 3.23% at December 2006)
- Coverage ratio of total net impaired loans increases by 4.3 pp (53.2% at June 2007 compared to 48.9% at December 2006)
Today the Board of Directors of UniCredito Italiano (UniCredit) has approved second quarter 2007 (2) consolidated results which show a net profit that grew by 6.8% YoY to reach €1,827 million (mn), the best result in the Group's history, despite the lower contribution of net income from investments which in the second quarter 2006 included a contribution to net income of €332 mn following the sale of Splitska.
In the first half 2007 the Group's net profit rose to €3,607 mn, an increase of 16.6% YoY. ROE (3) in first half 2007 is 19.8% (compared to 19.0% in the first six months of 2006). EVA generated in the semester is equal to more than €2 billion (bn) (€2,073 mn), +53% YoY.
The operating profit (€3,340 mn) rose significantly by approximately 21.8% YoY (+21.6% YoY on a like-for-like foreign exchange and perimeter basis) in second quarter 2007, attributable to a positive contribution from all divisions (including Markets & Investment Banking (MIB): +72.5% YoY, Retail: +23.4% YoY, Private & Asset Management: +19.2% YoY and Corporate: +11.8% YoY) and the decidedly robust performance of the CEE area (the Poland's Markets rose by +22.3% at constant FX, while the Central Eastern Europe (CEE) Division rose by +24.2% YoY at constant FX).
The Group's operating income reached €6,547 mn, approximately +9.4% YoY (+9.8% YoY on a like-for-like foreign exchange and perimeter basis), due to growth in both net interest income (€3,513 mn, +9.4% YoY, +9.7% on a like-for-like foreign exchange and perimeter basis) and net non-interest income (€3,034 mn, +9.4% YoY, approximately +10% on a like-for-like foreign exchange and perimeter basis).
Net interest (€3,188 mn), forming part of net interest income, grew by 8.4% YoY (+8.8 % on a like-for-like foreign exchange and perimeter basis) thanks primarily to a rise in the volumes intermediated with customers and an increase in market rates, which favored the remuneration of the investments in own funds. Customer rates, on both loans and deposits, increased less than market rates which had a positive effect on deposit spreads and a negative effect on loan spreads.
Net customer loans for the Group totaled €454.1 bn at June 2007 (+2.9% when compared to December 2006).
The growth in the second quarter (+1.2%) was sustained by the Retail, Corporate and the CEE Divisions, while the reduction in the non strategic assets allocated to the German Corporate Centre continued. The positive trend in consumer credit (+23.8% YoY , +2.3% from the beginning of the year) and leasing (+10.7% YoY, +14.3% in the first six months of 2007) also continued.
Customer deposits, excluding securities, confirm the growth trend rising by 3% in the quarter (+5.3% from the beginning of the year) to €303 bn, thanks to a significant contribution from both Retail and Corporate.
Net commissions, equal to €2,334 mn rose by 10.7% YoY (+11.5% YoY on a like-for-like foreign exchange and perimeter basis), a positive trend confirmed in the last quarter (+2.6%). All the Divisions contributed significantly to the growth in commissions, particularly the MIB (+35.2% YoY ) and CEE (+23.6% YoY ) Divisions. The trend in Asset Management (+16.8% YoY) and Corporate (+9.8% YoY) was also good. The most dynamic components in this category were fees linked to segregated accounts (+36%) and mutual funds (+19%). Commissions in the first half rose by 8.7% YoY with important results from both segregated accounts (+42%) and the placement of insurance products (19%). Overall commissions from asset management rose 9.5%, benefiting from both an increase in volumes and solid recovery in up-front and performance fees, which had dropped in the first quarter.
At the end of June 2007, in fact, volumes of the assets managed by the Group's asset management companies reached €256 bn, with a significant increase in the last twelve months (+9.8%) and an increase of 2.4% in the quarter. Net inflows since the beginning of the year were positive at €3.7 bn, thanks to the decisive contribution of the US (€3.3 billion ) and the other international markets where the Group is active. In Italy the Group strengthened its market share by 23 bp in the second quarter reaching a market share of 15.66% at June 2007. The total financial assets of the Private Banking Area amount to approximately €194 bn, up 3.5% on March 2007.
Net trading, hedging and fair value income (€559 mn, -0.9% YoY ) was influenced by the fair value valuation of the Generali option that had a negative impact of €40 mn in second quarter 2007 compared to a positive €42 mn in second quarter 2006. Net this effect, growth would have amounted to 14.7% YoY primarily attributable to the sound performance of the Markets & Investment Banking Division (€484 mn, approximately +33% YoY ).
Other net income totaled €141 mn, an increase of 40 mn YoY .
Operating costs (€3,207 mn, -1.1% YoY, -0.4% YoY on a like-for-like foreign exchange and perimeter basis) benefited from new Italian legislation related to termination of employment and the provisioning for pensions in Austria. Net the effects of these items, the costs grew by approximately 7% YoY with an increase in staff costs (€1,817 mn) of 6.9% YoY primarily due to the variable component linked to business results (in particular in the MIB, Asset Management and Poland's Markets Divisions). This trend was also impacted by the effects of the significant expansion of the activities in selected Central Eastern European countries and investments in the global business lines.
Other administrative costs (€1,171 mn) grew by 10.8% YoY (+11.2% on a like-for-like foreign exchange and perimeter basis) due to the rapid and marked expansion of the CEE Division network (particularly in Turkey, Hungary and Russia) and to the outsourcing of certain back office functions.
Amortisation, depreciation and impairment losses on intangible and tangible assets (€289 mn) dropped by 4.6% YoY (-4.4% on a like-for-like foreign exchange and perimeter basis).
The cost/income ratio improved noticeably from 54.2% in second quarter 2006 to below 50% (49%) in second quarter 2007.
The provisions for risks and charges (€70 mn compared to €79 mn in second quarter 2006) are basically unchanged YoY, integration costs amounted to €19 mn versus €52 mn in second quarter 2006.
As regards to the trend in asset quality, the improvement, begun at the end of 2005, in the Group's net impaired loans (€12,342 mn) continued with a further reduction of 13.5% vs 2006 particularly thanks to decided decline in restructured loans. The most significant contributions were reported in Germany and Poland. The total impaired loans/net customer loans ratio fell from 3.23% at the end of 2006 to 2.72% at June 2007.
The coverage ratio of total impaired loans improved by more than four percentage points reaching 53.2% at June 2007 (compared to 48.9% at December 2006) and in terms of net non performing loans the ratio rose from 61.5% at year-end 2006 to 63.6%, testimony to the validity of the policies to improve risk control and coverage implemented by the Group, particularly outside of domestic market.
Net income from investments amounted to €89 mn (compared to €449 mn in the same period of the previous year). More in detail, while the second quarter 2006 included a capital gain of €367 mn from the sale of Splitska, in the second quarter 2007 the only positive relevant non-recurring item was the sale of HVB's equity investment in Munich Re (approximately €70 mm). On a like-for-like foreign exchange and perimeter basis (ex Splitska), therefore, net income from investments grew by 15.3% YoY.
Income tax for the period, was 27.4% higher YoY at €808 mn, translating to a tax rate of 28.6%, an increase over 24.8% reported in second quarter 2006.
Net profit, therefore, amounted to €2,021 mn (+5.0% YoY ).
Minorities totaled €194 mn at the end of June 2007, compared to €230 mn in the same period of 2006.
Net profit attributable to the Group totaled €1,827 mn, an increase of €116 mn (+6.8%) when compared to second quarter 2006. The trend in the first two quarters of 2007 indicate that the Group will exceed its year-end EPS target of 0.56 cents.
The Group's portion of net equity amounted to €39,748 mn (38,468 mn at the end of December 2006).
Core Tier 1 equaled 6.09%, an improvement of 27 bp on year-end 2006 (5.82%). The Total Capital Ratio reached 10.48% at June 2007 (basically in line with December 2006).
At the end of June 2007, the Group's organization consisted of a staff (4) of 135,880 (-1,317 heads when compared to December 2006). This total is the result of a combination of factors: on the one hand, the reduction in personnel following the outsourcing of several functions (-3,121 heads) and the exit of companies from the Group (-1,585 heads), efficiencies in the Corporate Centre and in the GBS (-1,020 heads), in the CEE countries excluding Russia and Turkey (-489 heads) and Retail (-26 heads); and on the other hand, an increase in resources due to the inclusion of new companies in the perimeter of consolidation (+350 heads) along with growth initiatives (+1,453 heads) mainly in Russia, Turkey, Retail - Italy and in leasing.
The Group's network consists of 7,486 branches (5) (+129 on December 2006).
UniCredit announces that Bank Austria Creditanstalt (BA-CA) has finalized the acquisition of the entire institutional business of the Russian broker Aton through the purchase of 100% of AI Beteiligungs GmbH, a company newly created to hold shares of ZAO Aton Broker, Aton International Ltd and OOO Aton Line. The total purchase price is US$424 million (approx. €307 million). In addition, BA-CA has finalized the acquisition of a 9.97% of the total share capital of International Moscow Bank (IMB) from EBRD for a price of ca. US$229 million (approx. €166 million). Following completion of such acquisition, BA-CA now holds 100% of IMB's share capital.
Declaration by the Senior Manager in charge of drawing up Company Accounts
The undersigned, Ranieri de Marchis, in his capacity as the senior manager in charge of drawing up UniCredit SpA's company accounts
as prescribed by §154bis, 2 of the Testo unico delle disposizioni in materia di intermediazione finanziaria [the "Single Financial Services Act"] that, to the best of his knowledge and belief, the Consolidated Quarterly Report at 30 June 2007 agrees with the documentary records, ledgers and accounting data.
(1) EVA: Economic Value Added, equal to the difference between NOPAT (net operating profit after taxes) and the cost of capital.
(2) Since the close of FY 2006, the most significant changes in the scope of consolidation were principally due to the HVB Group, with the entry of 3 subsidiaries in the Retail Division (Planethome AG and its subsidiaries Planethome GmbH and Enderlein) and one Private Banking Division entity (Wealth Management Capital Holding GmbH), and the exit of Indexchange and HVB Payments & Services GmbH. Compared to H1 2006, further significant changes in the scope of consolidation referred to the sale of Splitska Banka on 30 June 2006, Uniriscossioni, 2S Banca and Banque Monégasque de Gestion. For comparison purposes, the condensed income statement also includes the change in individual items over Q2 and H1 2006, scope of consolidation and exchange rates used to translate subsidiaries' income statements being the same.
The main assets recognised as "Non-current assets and disposal groups classified as held for sale" under IFRS 5 in the balance sheet as at 30 June 2007 were "BPH200", the BPH business to be sold following the agreement with the Polish Authorities, and Istratourist, a subsidiary of Zagrebacka Banka operating in the holiday industry already recognised under this item in March 2007.
(3) Calculated on the basis of the average shareholders' equity for the period (excluding dividends to be distributed, reserves for AfS assets and hedge cash flows)
(4) "Full time equivalent", calculated according to a new methodology which does not include unpaid leaves. In the figures reported the KFS Group, proportionately consolidated, is included at 100%.
(5) In the figures indicated the KFS Group, proportionately consolidated, is included at 100%.
Certain of the statements contained herein may be statements of future expectations and other forward-looking statements that are based on management's current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. UniCredito Italiano S.p.A. assumes no obligation to update any information contained herein.
Milan, August 3rd, 2007
UniCredito Italiano S.p.A.
Via San Protaso 1/3
Securities listed on German regulated markets:
Listed: Official Market (Amtlicher Markt), Frankfurt Stock Exchange (General Standard)
Attached are the Group's key figures, the Group's reclassified balance sheets and income statements and the main Divisional results, which are not subject to certification by the Independent Auditors.
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